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Transaction Composition and House Price Index Measurement: Evidence from a Repeat-Sales Aggregation Index

William Larson () and Justin Contat ()

No 21-01, FHFA Staff Working Papers from Federal Housing Finance Agency

Abstract: We develop a framework for estimating city-level repeat-sales house price indices that are robust to submarket appreciation and sampling heterogeneity, two issues that confound classic approaches. A new algorithm ensures feasible estimation in all periods, despite cases of low transactions counts in some submarkets. With the geometric Laspeyres index as our target, numerical simulations show this algorithm uncovers the population index even when house prices, quantities, and transaction sampling vary across locations and over time. Then, using 40 million repeat-purchase transactions in the United States, we show differences exist between this index and transaction-weighted indices over certain periods and locations, especially in large cities.

Keywords: sampling; standard urban model; index number theory (search for similar items in EconPapers)
JEL-codes: C43 R30 R32 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2021-04
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